Research On The Impact Of PPP Project Financing Efficiency In The Process Of Local Government Implicit Debt Reduction

After the enactment of the Budget Law in 1994,local governments did not have the power to issue bonds on their own under the principle of spending within their means and balancing revenues and expenditures.After the tax reform,the financial power of local governments has been reduced and the power of local governments has been increased.Along with the rapid development of urbanization and economy,and in the face of the assessment mechanism of GDP promotion,a large number of public infrastructure has been added in various regions,and the financial gap of local governments has been increasing.Lacking the power to issue bonds independently and facing the pressure of increasing fiscal gap,local governments have formed financing methods such as local platform companies,local state-owned enterprises,land income,and pledge guarantees.These financing methods have not been disclosed and managed in the budget,which is a kind of hidden debt,and the financing scale is gradually increasing.The central government noticed that the accumulation of hidden debt of local governments may lead to other risks,and revised the Budget Law in 2014.Since then,local governments can issue bonds within the limits approved by The State Council and borrow independently.This debt has been put under budget management and is no longer hidden.Public Private Partnerships(PPP)entered China in the 1990 s,but progress was slow,until the central government used the idea to alleviate the hidden debt problem of local government.As a large amount of hidden debt of local governments flows into long-term investment public service projects such as infrastructure construction and park construction,PPP mode is mainly applied to infrastructure construction projects and can effectively attract social capital participation.Social capital participation in the provision of public goods and services can calm the level of local fiscal expenditure and reduce the pressure of local government fiscal expenditure.PPP model has become an important application of de-concealment of local government affairs.In 2014,the Center for Cooperation between Government and Private Capital(PPP Center)of the Ministry of Finance was established,encouraging local governments and private capital to participate in PPP model and promoting the application and development of PPP model in China.In 2017,the central government’s continuous statistics and tracking of the hidden debt of local governments found that the de-concealment of local government debt was less than expected,and the PPP model had become a tool for some local governments to illegally use to increase hidden debt.In this paper,two PPP projects of Company A are selected as case studies.The two case projects are implemented before and after 2017,respectively in the two stages of local government debt de-masking,which is in line with the background and characteristics of the application of PPP model de-masking of local government debt in different stages.The main advantages of PPP mode are that it can attract social capital participation and relieve the pressure of local government debt.However,most investment funds of PPP mode still come from debt financing.The financing situation of PPP projects plays an important role in the implementation and implementation of the projects.By comparing the financing efficiency of the two projects,this paper finds that the operation mode of PPP projects in the first stage of the decentralization of local government debt before 2017 is better than that in the second stage after 2017,but the financing efficiency is lower.After further analysis of PPP projects,this paper concludes that the decentralization of local government debt is less than expected.It has a negative effect on the financing efficiency of PPP projects,but the positive effect of the signal effect and the effect of the PPP investment subject being affected to change the investment behavior on the project financing efficiency offsets the negative effect and the effect is stronger.The case study in this paper is representative to a certain extent,and puts forward relevant suggestions on the improvement of PPP system,the improvement of assessment and evaluation methods,and the enrichment of financing channels.It is hoped that this study can provide some ideas for future research on important financing problems of PPP projects,and also help practice PPP projects to carry out some reference for financing problems management.